News and commentary about road pricing across the globe. Tolls, congestion charging, distance based charging, road user charging. Public policy, economics, technology and more. If Google brought you here, look down the right sidebar for references.

Thursday, 15 March 2012

News Briefs: Gothenburg, India, London, South Africa, Toronto

Gothenburg

Further to an earlier report, a press release from the firm has confirmed that Q Free is supplier for delivery of road side equipment, infrastructure and service and maintenance for 2 years with an option for additional 6 years for the forthcoming Gothenburg congestion charging scheme. The price is NOK 143 million (US$25 million).

India

Fitch ratings has released its latest report on Indian toll roads. Highlights include:
- First-year actual traffic levels are a strong indicator of the accuracy of traffic forecasts and hence of a project's economic prospects;
- Traffic volume forecasts are systematically over estimated, because of sponsor bias, lack of data and lack of analytical rigour. Some cases see traffic 45% below forecasts.
- High inflation has meant inflation-proof toll increases have mitigated low demand, but demand elasticity responses to ongoing increases are unclear;
- Most projects are highly leveraged so highly susceptible to failure to meet forecasts;
- Even given short term pressure, most projects retain long term capability to service debts;
- More recently some concessionaires have been allowed to toll completed segments once 75% of a project is completed, which mitigates some of the current challenges.

London

The Evening Standard reports that embassies in London have now accumulated unpaid charges and fines for London's congestion charge worth a total of £58 million (US$91 million). Those that do not pay claim it is a tax, so diplomats are exempt from paying it. However, some embassies do pay. The biggest debtor is the United States, which owes £6.1 million, followed by Russia, Japan and Germany. Curiously a website from the Liberal Democratic Party claims that the US embassies in Oslo and Singapore do pay the toll and road pricing charges in those cities, but then again Oslo is clearly a toll paying for specific roads, and Singapore road pricing is also a charge metered on usage. Maybe the next major change to the London scheme should be to render it more similar to the others? Of course in Stockholm, foreign registered vehicles are exempt, so making that comparison is not possible. Around 50 embassies refuse to pay in London. Of minor interest to me is that my country of birth, New Zealand, does pay, but Australia doesn't. This link shows a list of those who have not. Curiously as well, South Korea doesn't pay, but North Korea does (or doesn't drive into central London at charging times)!

South Africa

There continues to be extensive debate about tolling in South Africa, with two recent reports indicating strong political resistance to expanding tolls. One report from the Independent Online claims that the KwaZulu-Natal (a South African provincial government) Department of Transport will continue to oppose plans to introduce tolls on roads along the “Wild Coast”. Meanwhile the City of Cape Town is reported to still be interested in taking two cabinet ministers to court following plans for tolls to be introduced as part of improvement proposals for existing highways in the city (the Winelands project involving the N1 and N2) from the South African National Roads Agency Ltd (SANRAL). The City is claiming that SANRAL did not adequately address its concerns through its disputes resolution process. There is another political dimension here. Cape Town is governed by the Democratic Alliance (DA), South Africa's leading opposition party (the national government is of course governed by the ANC). This battle is, in part, about the DA challenging the dominance of South Africa's ruling party.

Meanwhile, the trade union federation COSATU has been driving protests against tolling, but this article from South Africa Report doubts the union will achieve its aims. It says that COSATU's position is "rooted in its opposition to privatisation" and it presumably sees user pays as part of that (and reflecting that SANRAL is a commercial, although state owned, company). It also highlights some debating points from Deputy Transport Minister, Jeremy Cronin, of the South African Communist Party, who makes some interesting points arguing why tolls can be justified. One such point being that the alternative is general taxation, with everyone, including those who cannot afford a car, paying for what is a facility predominantly used by the relatively affluent. Another being that if tolling is to promote mode shift, other modes must be available and be of good enough quality.

IT Web South Africa reports that the toll cap for the Gauteng Freeway Improvement Project only applies to vehicles paying with a tag and beacon account, not those paying through ANPR detection. The articles also describe how the opposition Democratic Alliance is opposing tolls, and how SANRAL is dealing with misinformation about payment options.

Toronto

The world's first fully electronic free flow toll road (ETR 407) is to be extended with the Highway 407 East project. It will be extended in two phases, the first a 22 mile extension east to Oshawa, the second extension to Highways 35/115, according to the Montreal Gazette. SNC-Lavalin has been named as the preferred consortium to design, build, finance and maintain the tolled extension.

I didn't think toll roads were about serving the rich, or that any such systems discriminated - except of course, like all markets, charging people for a service means those with more money find it easier to pay than those with less.

In which case it is rather late to attack market principles, and before you blame roads, perhaps you should ask vehicle manufacturers, farmers, clothing makers and indeed producers of virtually all goods and services should be blamed for discrimination.

Roads should be charged to recover the long run costs of building and maintaining them in the first instance, and then to dampen/encourage demand within the scope of the road's capacity.

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What is road pricing?

Road pricing is any system that directly charges motorists for the use of a road or network of roads. Traditionally it has meant tolls on single routes, particularly crossings such as bridges or tunnels. More recently it also includes area, cordon and zone pricing of urban areas, and distance and time based charging of whole networks. It does not include fuel or tyre taxes, or taxes on ownership or purchase of road vehicles.